IT: Retail Sales

Highlights
Retail sales (ex-autos) lost ground at year-end. However, a 0.3 percent monthly fall only partially reversed November's revised 0.9 percent spurt although, following a 0.9 percent decline at the start of the quarter, the trend remains depressingly soft. Unadjusted annual growth was minus 0.1 percent, down from 1.4 percent in December.

Volume purchases matched the monthly headline drop and reflected a 0.2 percent slide in food sales and a 0.3 percent decrease in non-food demand. The December data sum up what was another poor year for the retail sector. Volume sales in calendar 2017 were 0.3 percent lower than in 2016 and, during the course of the year, rose in just five of the twelve months.

On a brighter note, consumer confidence has picked up significantly since the middle of 2017 and the economy as a whole seems to be gaining some momentum. Nonetheless, unemployment (10.8 percent in December) remains worryingly high and uncertainty surrounding the upcoming March election could prompt additional consumer caution. The first quarter is unlikely to be a particularly happy one for Italian retailers.

Definition
Retail sales measure the total receipts at stores that sell durable and nondurable goods. The headline data are expressed in nominal terms but volume statistics are also available. Autos are excluded. Only a very limited breakdown of subsector performance is available in the first report but much greater detail is provided in the following month's release.

Description
With consumer spending a large part of the economy, market players continually monitor spending patterns. Retail sales are a measure of consumer well-being. The pattern in consumer spending is often the foremost influence on stock and bond markets. For stocks, strong economic growth translates to healthy corporate profits and higher stock prices. For bonds, the focus is whether economic growth goes overboard and leads to inflation. Ideally, the economy walks that fine line between strong growth and excessive (inflationary) growth.

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